Tuesday, February 15, 2011

Today's Headlines

  • Import Prices in U.S. Rose 1.5% in January, Led by Fuels, Food. The cost of goods imported into the U.S. rose more than forecast in January, boosted by higher prices for commodities such as fuels and food. The 1.5 percent increase in the import-price index followed a revised 1.2 percent gain in December, Labor Department figures showed today in Washington. Economists projected a 0.8 percent increase for January, according to the median estimate in a Bloomberg News survey. Excluding food and fuel, import prices climbed 0.6 percent. A weaker dollar along with rising demand from emerging markets such as Brazil and China have pushed up prices of oil, food and building materials. From a year earlier, import prices increased 5.3 percent in January, compared with a 5.1 percent gain in December. Import prices were forecast to rise 4.4 percent in January from a year earlier, according to the survey median. The cost of imported petroleum rose 3.4 percent in January from the prior month and gained 18.5 percent over the past four months. Prices of imported food increased rose 2.6 percent last month, and were up 14.8 percent from a year earlier. Since reaching a one-year high on June 7, the dollar has fallen about 8.1 percent against a trade-weighted basket of major currencies, making imported goods more expensive.
  • Food Prices Pushed 44 Million More Into Poverty, World Bank Says. Rising global food prices have pushed 44 million more people into “extreme” poverty in developing countries since June, the World Bank estimates. The Washington-based World Bank said its food-price index jumped 15 percent between October and January, led by wheat costs. “Global food prices are rising to dangerous levels and threaten tens of millions of poor people around the world,” World Bank President Robert Zoellick said today in an e-mailed statement. “The price hike is already pushing millions of people into poverty and putting stress on the most vulnerable, who spend more than half of their income on food.” Wheat and corn prices in Chicago have extended gains this year after jumping at least 47 percent in 2010. Surging food costs contributed to protests in Tunisia that ousted President Zine El Abidine Ben Ali last month and Egyptian president Hosni Mubarak.
  • U.S. Economy: Retail Sales Climb Less Than Forecast. Sales at retailers rose less than forecast in January, showing it will be difficult for American consumers to sustain last quarter’s pickup in spending without bigger gains in employment. Purchases increased 0.3 percent, the smallest gain since a drop in June, according to Commerce Department figures today in Washington. Other reports showed manufacturing in the New York area accelerated and confidence among home builders stagnated. The sales data also indicated winter snowstorms may have played a role in the slowdown as Americans stayed away from restaurants and home-improvement stores.
  • Option ARM Time Bomb Blows Early, Easing Damage to U.S. Housing. This was the year thousands of U.S. homeowners with option adjustable-rate mortgages were supposed to default as their payments spiked. Low interest rates and a surge of early delinquencies mean the numbers probably won’t be as bad as forecast, softening the blow to a housing market.
  • Chart of the Day: Technology Boom is Backed by Profits This Time.
  • Emerging-Market Stocks Fall on JPMorgan(JPM) Equity Forecast, Bahrain Protests. JPMorgan strategists led by Adrian Mowat in Hong Kong cut their year-end target for the MSCI index to 1,300 from 1,500 on expectations that accelerating inflation in developing nations will spur tighter monetary policy. “Developed markets are becoming more attractive on concern that rising inflation and interest rates could hurt growth in emerging nations,” said Jonathan Ravelas, strategist at Banco de Oro Unibank in Manila. “Portfolios are getting rebalanced in favor of developed markets.” The MSCI emerging-market index has dropped 4.1 percent this year as central banks in China, Brazil and India raised benchmark interest rates to curb inflation spurred by record food prices. The MSCI World index has gained 5 percent in 2011 as the U.S. Federal Reserve and European Central Bank keep borrowing costs at record lows.
  • Portugal Raps Delays on EU Bailout Revamp, Spars With Germany. Portugal said delays in overhauling the European rescue fund for debt-hit states threaten a new bout of market turmoil, sparring with Germany and Austria over how to resolve the fiscal crisis. “The discussions are taking longer than desirable and delays and hesitations affect the euro zone and the stabilization on the euro,” Portuguese Finance Minister Fernando Teixeira dos Santos said at a meeting of European Union finance ministers in Brussels today. Criticism from Portugal, seeking to wrestle down Europe’s fifth-highest deficit without falling back on an aid package, met with a rebuff from Germany and Austria that highlighted the north-south split over reshaping the 17-nation economy. Bonds in Portugal and Greece slipped for a third day as Germany opposed a stepped-up rescue effort until European governments take fresh measures to bolster the region’s competitiveness.
  • Google's(GOOG) YouTube Ad-Linked Video Views Climb to More Than 3 Billion a Week. YouTube is running advertisements on videos more than 3 billion times a week, a 50 percent increase from May, helping Google Inc. wring more revenue from its largest acquisition. Ad growth for the video-sharing website has also led to a surge in sales for makers of video clips for the site, said Shishir Mehrotra, director of product management at YouTube. The gain in ad-supported video views means that the company is making money on about one-fifth of its 14 billion weekly views, he said. “A lot of it is based on growing ad products as well as growing inventory,” Mehrotra said in an interview. “Our partners are starting to see real success on the platform, and so they’re starting to invest.” YouTube probably brought in about $710 million in revenue last year, up from $345 million in 2009, according to Sandeep Aggarwal, an analyst at Caris & Co. Mountain View, California- based Google doesn’t break out YouTube’s sales. Aggarwal also said YouTube likely reached profitability last year. YouTube first reached 3 billion ad-supported views weekly in October after hitting 2 billion in May 2010 and 1 billion in 2009, he said. Google, mostly due to YouTube, had more than 80 percent of the U.S. market for Internet-video views in December, making it the largest viewing site, according to ComScore Inc. No. 2 Yahoo! Inc. had 37 percent as many views as Google.
  • Berkshire(BRK/A) Departs BofA(BAC) 'a Loser' on Stake After Three Years. Warren Buffett’s Berkshire Hathaway Inc. sold its stake in Bank of America Corp., ending an investment that spanned three and a half years in which the lender’s stock lost more than two-thirds of its value.
  • Citigroup's(C) Pandit Says Emerging Markets at Risk of Overheating, Inflation. Citigroup Inc. Chief Executive Officer Vikram Pandit said emerging markets must prepare for possible inflation because they’re at “risk of overheating.” “Many of the emerging markets are operating at or near capacity and are therefore at risk of overheating,” Pandit said today in prepared remarks for an investor conference in New York hosted by the brokerage firm ISI Group Inc. They “must deal with the possible consequences of inflation.” Citigroup, the third-largest U.S. bank by assets, gets more than half its revenue from emerging markets, Pandit said.
  • Republicans Grill Lew Over Budget as Battle Escalates. House Republican Budget Committee Chairman Paul Ryan told White House budget director Jacob Lew the president has “disappointed us all” with his $3.7 trillion budget request because the plan doesn’t go far enough on spending cuts. “Why did you duck?” Ryan said at a House Budget Committee hearing where Lew defended the proposal President Barack Obama unveiled yesterday. “You know the drivers of our debt are entitlement programs, and yet you do nothing to address that.”
  • Apple(AAPL) Starts Subscription Payment Service in App Store. Apple Inc. started a subscription service for publishers of newspapers, magazines and other content applications, allowing them to sell multiple issues through a single purchase in the company’s online App Store. The subscriptions will be sold using the same App Store billing system that lets customers buy individual applications for the iPhone or iPad, the Cupertino, California-based company said today in a statement. Publishers who participate will have to offer their lowest subscription rates within Apple’s store. “All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app,” Apple Chief Executive Officer Steve Jobs said in the statement. Jobs remains involved with strategic decisions while on medical leave.

Wall Street Journal:
  • Bahrain Opposition Bloc Defects as Protests Mount. A funeral for a man killed during demonstrations swelled into a massive protest Tuesday, drawing in thousands for a second day of clashes that ended with another death and the defection of the country's main opposition bloc from parliament. The clashes in Bahrain represent a significant escalation of the Arab unrest that has fanned out from Tunisia, culminating in the resignation of Egypt's Hosni Mubarak on Friday. Bahrain is the only Arab state so far in the oil-rich Persian Gulf beset by unrest amid protests across much of the rest of the Middle East.
  • Iraq To Hold New Oil, Gas Exploration Bid Round In 4Q - Official.
  • Deutsche Borse Sets Its Deal to Buy NYSE(NYX). NYSE Euronext and Deutsche Börse AG outlined plans for a combination that would create the world's largest exchange operator, but would face hurdles in winning support from regulators and lawmakers and overturning investor skepticism about forecast synergies. The companies aim to close a transaction by year-end that would see Deutsche Börse shareholders own 60% of the entity in an all-stock deal that offers NYSE Euronext shareholders a 10% premium to its share price before deal talks were announced.
Business Insider:
Zero Hedge:
New York Post:
  • O's Losing Ground Across Mideast. Despite the president saying that a nuclear Iran is "unacceptable," Iran may become a card-carrying member of the Mushroom Cloud Club this year; some experts believe it already has gathered enough uranium for at least a couple of A-bombs. Not to mention that its ever-expanding space-launch and satellite programs have put Tehran closer to developing an ICBM capable of reaching the US homeland -- all while our missile-defense programs lag behind the threat.
New York Times:
  • SEC Questioned on Disclosure of Criminal Inquiries. It is no mystery that the Securities and Exchange Commission and the Justice Department work closely together in pursuing cases, often filing parallel criminal and civil cases on the same day. For lawyers involved in S.E.C. investigations, an important consideration is whether there is any criminal interest in the case — information that the agency has historically been loath to reveal.
  • To Stand Out, Retailers Flock to Exclusive Lines. To find Miley Cyrus’s line of clothes, shoppers head to Wal-Mart. For Selena Gomez’s, they go to Kmart. Jennifer Lopez’s line is at Kohl’s, and Demi Lovato’s at Target. Rachel Bilson dinnerware can only be found at Macy’s, while for the Kardashian Kollection, fans must go to Sears.
ABC News:
  • Oil Prices Fall on Economy, Supply Concerns. Oil prices fall from early highs as rising supplies and demand shift focus from Middle East. Benchmark West Texas Intermediate crude fell 66 cents to $84.15 a barrel in midday trading on the New York Mercantile Exchange after rising as high as $85.98 earlier in the session. In London, Brent crude fell 79 cents to $102.29 a barrel on the ICE Futures exchange.
Real Clear Politics:
  • Bloomberg Predicts Health Care Law Will Be Defunded. In a video posted on an Orthodox Jewish online news publication on Monday, New York City Mayor Michael Bloomberg is seen discussing at length his critical views of the health care reform law, suggesting that it does not address the most pressing issues facing the health care system both nationwide and in the city he governs. In the video, Bloomberg is shown paying a visit to members of a mourning family who had recently lost their brother. After Bloomberg offers his condolences, one of the family members noted that his brother was in the emergency room for 73 hours before he died and said that overcrowding in emergency rooms in New York had become out of control. "It's going to get worse with the health care bill and with the government's cutbacks," Bloomberg said, predicting that hospitals would close due to a lack of funding. "All of these costs keep going up. Nobody wants to pay any more money, and at the rate we're going, health care is going to bankrupt us."
  • Liberals Launch Anti-Darrell Issa Crusade. Democrats are understandably obsessed with Darrell Issa — he’s built himself up as a one-man investigative machine aimed straight at the Obama presidency. But a handful of liberal political operatives in California — including a former Hillary Clinton hand — are taking their anti-Issa passion to a whole new level, launching a nonprofit group, a website and even paid media advertisements aimed at undermining and investigating the rabble-rousing chairman of the House Oversight and Government Reform Committee.
USA Today:
Financial Times:
  • Inflationary pressure is likely to increase in China on rising food prices, citing a report by the APEC Business Advisory Council. The government may further cut lending quotas and increase interest rates and bank reserve requirements to rein in inflation, according to the report.
  • Central China County Sees Surging Sales of "apartments up in the air" Despite Warning of Financial Risks. Despite the central government's efforts to control soaring housing prices and speculation, residents in a small county in central China's Henan Province are rushing to purchase, even if the apartments are still "up in the air". Realtors in Guangshan County in Xinyang City sell houses with just apartment layout plans. Some properties are even sold with old buildings on the foundations. A resident surnamed with Zhou, who paid 50 percent as a down payment last May for an apartment in the property project "Xianchengshuyuan", has not seen any construction signs on the lot. However, he is very optimistic about his potential apartment's value. "Although I haven't seen a brick, the price has almost doubled," he said.
Market News International:
  • China may further tighten the money supply even after January inflation was below market expectations, citing two people close to the National Development and Reform Commission. The government is "facing growing inflation pressure in the coming months," one of the people said.
  • BYD Co.'s January vehicle sales fell 15% from a year ago to 52,0454 units, citing the company.

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